SA wines may find favour with growing Chinese market

The South African wine industry may receive a surprise boost in the years to come as import tariffs imposed on Australian wine by China sees the Asian giant shopping for wine in other regions.

China has imposed export tariffs of between 107%-212% on Australia’s wine industry, following similar bans or tariffs on Australian barley, beef and coal. Beijing says anti-dumping measures are the primary reason for the tariffs.

South African wines only make up around 1% of China’s total imports, says not-for-profit organisation, Wines of South Africa (WOSA).

Around 52 million Chinese citizens drink imported wine – a figure that has doubled in the past seven years. China is the globe’s fifth largest importer of wine, with Australia making up 40% of imports.

A major reason South African wine finds its way into so few cellars is due to the decades’ long domination of French exporters and few South African exporters who have built solid relationships with China, says Phillip Retief, CEO of Van Loveren Vineyards.

South African wine is expensive relative to Australian, Chilean and New Zealand wines – all of which enjoy the benefits of free trade agreements.

Retief and Maryna Strachan, a member of WOSA, say China’s existing agreements with Chile and New Zealand, will make it likely these two nations pick up any slack. However, experts told Business Insider that if South African wineries take a 1% market share from Australia that would double SA’s exports to China.

One wine exporter believes the greatest challenge facing South African exporters will be pricing the wines appropriately, and aggressively marketing South Africa’s unique varieties such as Pinotage and Chenin.

Strachan says South African wineries that have established relationships with Chinese importers will benefit immediately from the wine ban, which took effect in late November.

South African companies like Trajan Wines, whose Totus Limited Release Pinotage won Best-Buy at the prestigious SIAL China International Trade Fair for Food in 2018, and Thandi Wines, with a contract to distribute premium wines in China, might benefit.

There is a growing number of wine enthusiasts in China who recognise the variety and quality of South African wines, says Strachan.

Not many South African wines feature on mega e-commerce platforms like Alibaba and JD.com, but exporters who find exposure online and on shelves could fill the void left by Australian vintages, says Retief.

2020 has been a poor year for wine sales in China. The significant amount of unsold wine will mean it may take some months for demand to pick up, according to Strachan.

Although results may only be seen over the long term, ‘we are already seeing the transition’, adds Strachan.